Step 5 (continued). Estimated Returns

When choosing the best funding strategies for your group, it is important to know what
kind of returns you can expect from a particular funding strategy. One of the
best ways to figure out costs associated with different funding options is to
ask other groups in your area. Here are some factors that can affect your organization's
fundraising costs and returns:

Age of your organization. New organizations can expect to see fewer returns
from their funding sources than established organizations. For example, success
with particular grants in previous years may determine success with those grants
in future years.

Competition for funds. If there are similar organizations in your area, you
may see a decreased return on investments.

Source of funds. Small gifts from individual donors will mean higher fundraising
costs, at least in the short term. In contrast, grants, major gifts, and donations
from corporations will mean lower costs. (However, individual donations are more
sustainable, as we will see on the next page!)

Different methods. Different methods have different returns. Below is an estimation
of returns from a few funding sources:

Source of Funds

Expected Costs

Membership

$0.20 to $0.30 per $1.00 raised

Special Events

$0.50 to $1.00 per $1.00 raised

Corporations/Foundations

$0.20 per $1.00 raised

Direct Mail (acquisition)

$1.25 to$1.50 per $1.00 raised

Direct Mail (renewal)

$0.20 to $0.25 per $1.00 raised

Non-monetary returns. While some of these strategies may be higher in cost
than others, they often have important non-monetary benefits, such as recruiting
new members, maintaining current membership, media exposure, and heightened awareness
of your watershed.

Fundraising costs has become a hot topic in the nonprofit sector. Not only are nonprofits
facing increased scrutiny on their operating and fundraising costs, but they are
also facing increased competition from other groups in their area. As a result,
nonprofits often feel the need to show low fundraising costs and assure donors
that their money is going towards programming and projects. Still, organizations
must be honest about their fundraising costs to develop trust among their donors.